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Savour the taste the next time you chop up a mushroom for your soup, because for thousands of people the real thing is now being replaced by a mushroom extract.

An Auckland company founded by scientist Yihuai Gao has sold more than 50,000 bottles of health supplements extracted from a species of mushroom that the Chinese call lingzhi.

In the next few years, Mr Gao hopes to apply the same technology to extract and concentrate the key healthy ingredients of cherries, strawberries, kiwifruit, avocado and a variety of herbs and marine life.

"It is lingzhi but much better," he says of his lingzhi extract, which he has mixed with extracts from a herb called cordyceps to make products that help with asthma, blood diseases, cancer and sexual impotence.

The Crop and Food Research Institute and Massey University are both investing in new Auckland laboratories to extend his research to other foods.

His company, Alpha Healthcare, plans a $2 million factory employing 30 to 40 people at Wiri to turn the research into commercial products.

"I like New Zealand because New Zealand has so much natural resource it can develop," he said.

Mr Gao, 53, was brought to New Zealand by Landcare Research in 1992, but left Landcare last July to develop his own company in cooperation with Crop and Food and Massey.

In October, National Party leader Bill English, MP Pansy Wong and managers from Crop and Food and Massey visited China with Mr Gao to launch a plan for another factory, employing 60 people at Nantong, near Shanghai.

His company already has 10 mushroom farms in China.

"I buy all the products from them and import them to New Zealand for processing and extraction here," he said.

"The final natural medicine products are sold in New Zealand and overseas. I am exporting to Australia, the US, Canada, Hong Kong, Taiwan, Japan and China, and starting this month in Singapore and Malaysia.

"All final products must be exported from New Zealand, not from China, because we need to keep the technology here and lots of people believe in New Zealand products. We can control the quality."

He has spoken to Maori elders about extracting similar products from native New Zealand plants.

"They understand the Maori medicine. If they go, this skill is lost," he said.

"So I would like to spend more time this year to visit some senior Maori people and ask them about Maori medicine."

Crop and Food chief executive Paul Tocker said his board had approved spending several hundred thousand dollars to develop a new laboratory at the Mt Albert Research Centre to work with Mr Gao on "extractables, nutraceuticals and functional foods" - foods which have been concentrated or modified to have particular health effects.

The expansion would double the existing 15 to 20 Crop and Food staff at Mt Albert in the next few years. He said the institute did not have any current proposals to invest in marketing products in China or elsewhere, but he was looking at "a number of technologies".

"If we get favourable indications from the work that we are doing, then I wouldn't rule out investing in marketing infrastructure as well as technology development."

The acting leader of Massey University's food and agribusiness cluster, Barry Stevenson, said Mr Gao would also be given laboratory and office space at Massey's Albany campus.